City Council
Report
City Council Meeting: November 18, 2025
Agenda Item: 4.G
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Fleet Services Subject: Approval of First Modification to Agreement #4980 with Natural Gas Systems, Inc. for Compressor Maintenance and Repair Services
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15301 of the California Environmental Quality Act (CEQA) guidelines; and
2. Authorize the City Manager to negotiate and execute a first modification to agreement #4980 in the amount of $257,000 with Natural Gas Systems, Inc., a California-based company, to continue providing maintenance, service, and repair for Compressed Natural Gas compressors and related equipment for the Santa Monica City Yards. This will result in a five-year amended agreement with a new total not-to-exceed amount of $503,000, with future year funding contingent on Council budget approval.
Summary
The City of Santa Monica’s Public Works Department provides essential services that maintain clean and safe neighborhoods and open spaces for residents, visitors, and City staff. These operations rely on vehicles and equipment managed and maintained by the City’s Fleet Management Division. Many of these vehicles operate on Compressed Natural Gas (CNG), a cleaner alternative fuel. To ensure reliable operations, minimize service disruptions, reduce maintenance costs, and maintain compliance with California Air Resources Board (CARB) Advanced Clean Fleet (ACF) regulations, staff recommends the continued maintenance of the CNG compressors by the vendor, Natural Gas Systems, Inc. (NGS).
Maintaining these compressors is essential to producing the CNG needed to fuel the 2 of 5
fleet and support the City’s ongoing compliance with CARB requirements. Staff collaborated with the Procurement Division and, in accordance with Santa Monica Municipal Code (SMMC) 2.24.250 (g), recommends authorizing an additional $257,000 in funding for agreement #4980 with Natural Gas Systems, Inc. (NGS) to support the continued service and repair of the CNG compressors due to the potential for substantial economic loss.
Discussion
The Fleet Management Division is responsible for ensuring the City’s diverse fleet of over 800 vehicles is available, dependable, meets the highest environmental standards for sustainability, and is safe to operate from acquisition through disposal — many of which use Compressed Natural Gas (CNG) fuel. Many fleet vehicles rely on CNG and will continue to do so for at least another six to ten years. Critical service vehicles—such as those recently put into service by Resource Recovery and Recycling—are CNG fueled. Natural gas is supplied by the Southern California Gas Company in an uncompressed form. Compressors located within City Yards then compress the natural gas into the high-pressure CNG that fleet vehicles use.
Vendor Natural Gas Systems, Inc. (NGS) has been the only provider that staff has been able to identify as capable of servicing and repairing these compressors. Following a bidding process (RFQ No. 12300117) in July, 2022, staff executed a contract with NGS on February 10, 2023, for a term of one year with four additional one-year extension options, for a total amount not to exceed $246,000. Staff has extended - and intends to continue extending - the contract until 2028; however, only $20,000 of the original compensation amount remains. The original estimated requested contract amount is no longer sufficient due to increased repair costs during monthly visits and a higher frequency of emergency calls to NGS to service the non-functioning CNG compressors.
While the scheduled monthly visits under the contract were previously adequate to keep the compressors operational, staff has had to make emergency calls more frequently, as this has become the only way to restore functionality. The compressors have required such emergency service five times in 2025. Additionally, an overhaul service 3 of 5
for the compressors was not included at the time of contract execution but is now necessary to maintain their operation. Staff collaborated with the Procurement Division, who approved the determination that this is considered an exception to competitive bidding based on SMMC 2.24.250 (g). Provision SMMC 2.24.250(g) allows for an exception based on determination that there is insufficient time to conduct a competitive process for a critical need, and failure to act could result in substantial economic loss.
Therefore, staff requests an additional $257,000 for this contract, which includes a 15% contingency plus emergency repairs. This amount accounts for monthly service throughout the contract term, the imminent cost to overhaul each of the four compressors, and an estimate for potential emergency services.
Item Quantity Total
Monthly Service 36 $ 81,322.56
Overhaul - Rebuild 4 $100,000.00
15% Contingency Plus
Emergency Repairs
$ 75,677.44
TOTAL $ 257,000.00
Other than vendor NGS, staff found no suitable vendors to complete this work. Staff has explored alternatives to increasing the contract amount in an effort to retain the most economical services for the City. These efforts included searching for another vendor via Department of Transportation contacts, cooperative sourcing contacts (e.g., Sourcewell), and conducting its own due diligence by researching and contacting other potential vendors. Furthermore, NGS has assessed our compressors and advised that they still have remaining service life and are considered best-in-class within the industry, despite being expensive to maintain. Therefore, staff has decided to maintain the current compressors rather than replace them.
The consequences of not maintaining these CNG compressors are significant. Without adequate funds, the compressors would likely become non-operational, resulting in a lack of CNG to fuel critical vehicles at City Yards. The Fleet Management Division would then need to purchase potentially lower-quality CNG from third-party providers, which 4 of 5
could lead to more breakdowns, contamination of vehicle CNG systems, and higher repair costs.
Environmental Review
The contract modification for CNG Compressor service is categorically exempt from CEQA pursuant to Section 15301 (Existing Facilities) of the CEQA Guidelines. Section 15301 exempts the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use.
The contract would provide for maintenance of the existing CNG compressor maintenance with the same purpose and capacity. Therefore, contract is categorically exempt as set forth in Section 15301 of the CEQA Guidelines.
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Vehicle Management Fund to increase the contract amount with Natural Gas Systems, Inc. to provide maintenance, service, and repair for CNG compressors and related equipment. Future year funding is contingent on Council budget approval.
Agreement Modification Request – CT #4980
Current
Authorized
Amount
FY 2025-26
Request
Amount
Future
Year(s) Amount Dept. Account # Total Revised Contract Amount $246,000 $30,540 $67,120 70500001.529081 $343,660
$12,056 $26,494 70500001.529084 $38,550
$37,774 $83,016 70500001.529085 $120,790
$246,000 $80,370 $176,630 $503,000.00
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Prepared By: Ernest Kwong, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. NGS_OAKS_7.15.25
B. NGS_LevineAct_7.15.25
C. Natural Gas Systems CSA Executed - 4980